Recommendation on mobile termination delivered to Minister

Tuesday, February 23, 2010

The Commerce Commission today delivered its final report on mobile termination access services to the Minister for Communications and Information Technology. The Telecommunications Act requires the Telecommunications Commissioner to make a recommendation to the Minister at the end of an investigation and include the views of two other members of the Commission.

The Telecommunications Commissioner, Dr Ross Patterson, has recommended that the Minister accept Telecom’s and Vodafone’s final undertakings as an alternative to regulation. Associate Commissioner Gowan Pickering’s view agreed with Dr Patterson’s recommendations. Commissioner Anita Mazzoleni’s view is that mobile termination access services should be regulated.

The final report concludes the Commission’s investigation into whether it should recommend to the Minister that mobile termination access services be regulated under the Telecommunications Act or whether commercial undertakings should be accepted as an alternative to regulation.

During the investigation, Telecom and Vodafone offered undertakings that will reduce mobile termination rates over time. Dr Patterson said, “I have concluded that both regulation and acceptance of the final undertakings would address the competition concerns that the Commission identified. In my view, the long-term interest of consumers will best be served by applying the least intrusive means to address the competition concerns identified in the investigation. This will allow market forces to continue to operate in areas outside the scope of intervention.”

“The final undertakings from Vodafone and Telecom have offered mobile termination rates that are significantly lower than those offered in earlier undertakings. While these rates remain above the range of the Commission’s cost-based benchmarks, they address the competition concerns identified by the Commission, and my recommendation is that they be accepted by the Minister,” said Dr Patterson.

“Addressing these competition concerns will lead to more competition in mobile markets for the long-term benefit of consumers. This should lead to better prices and services as companies compete to get and retain customers,” said Dr Patterson.

Commissioner Anita Mazzoleni said, “While undertakings will deliver a reduction in mobile termination rates three months earlier than a regulated outcome, the consequence is that mobile termination rates will remain significantly higher than the Commission’s benchmarks during the five-year period of the undertakings and remain higher at the end of the undertaking period. In my view, the barrier arising from the prices in the final undertakings continues to ensure an uneven playing field, and this will impede the benefits competition will otherwise deliver to New Zealand consumers.”

As the report is now with the Minister, the Commission will be making no further comment.

The Commission’s final report, the undertakings and the submissions received to date are all available on the Commission’s website www.comcom.govt.nz under Industry Regulation/Telecommunications/Investigations/Mobile Termination Access Services